China News - Summer 2004

Thank you China!

Thirty years ago China was part of the 'Red Menace' that threatened our way of life-but it has emerged as the unlikely saviour of the world!

China's booming economy has hauled the world from recession that followed the 9/11attacks and it has also revitalised many companies and parts of the world written off by investors. This was highlighted by Mr Wen Jiabao's meeting with Tony Blair as contracts were signed giving Britain over £1 billion worth of business.

China's economy has bolstered demand for British goods and services, which has contributed to record rates of employment. An example is the DIY chain store, B & Q that has 15 stores in China and is expanding rapidly. Another is Rolls Royce, which has just won a large order from airline Cathay for its expansion into China. There are many other companies benefiting in the same way-all bringing profits to British investors. The Chinese economy has helped Japan's recovery that will benefit British endowment and ISA investments. Australia is also picking up gains. Anything good for Japan and Australia is also good for Britain because they are major trading partners.

However financially, the most important item is China's part in keeping up demand for bonds issued by the American government. America has borrowed vast sums of money on the international markets to pay for the Iraq war and to rev up demand at home as it emerges from economic slowdown. The Chinese, who are awash with dollars after selling so many of their goods to American markets, has lent much of this money. They have built up a pile of US dollars worth £250 billion and it is probable that the dollar would have crashed without demand from China.

China is also making life better for Britons as well by manufacturing so many goods at cheap prices. Prices are kept low, keeping down inflation that has contributed to low interest rates for the seven out of ten of us who own our own homes.

However, steps are being taken to prevent China's economy overheating and interest rates may well have to go up. In the meantime we all owe the Chinese a favour-because without them the world could well be in a recession right now. (From Ian King in The Sun, 11 May 2004)

* Many of the same points are made in an article in The Economist, 15 May 2004, but there is no 'Thank you' and the title of the article 'The great fall of China?' is-in a different spirit?

Counterfeit foods and medical products.

The Chinese prime minister Wen Jiabao has ordered an investigation and promised severe punishment for those manufacturing and distributing counterfeit food products following the deaths of at least 50 babies after being fed a fake milk food product. The bogus products contained only 6% of the vitamins, minerals and protein needed for a growing infant. The intervention of the prime minister reflects growing anxiety about consumer safety in the wake of numerous food scares, which have included ham and noodles containing carcinogens. Experts say that the counterfeiting problem was a consequence of China's economic policy, which encourages growth at all costs, and some local governments are said to protect pirate manufactures as long as they generate profit and taxes. (From The Guardian, 21/4/2004)

Old Chinese Mushrooms pep up the middle-aged

An ancient Chinese remedy based on a wild mushroom aids the fitness of sedentary middle-aged people. A clinical study involved 131 volunteers who took either the remedy or a harmless placebo. Results showed a significant increase in aerobic fitness in participants who took supplements based on fermented extracts of the Chinese cordyceps mushroom.

Volunteers aged from 40 to 70 were monitored for lung capacity, heart rate and blood pressure during and after vigorous exercise and endurance walks. The researchers will report their results this week to the American Physiological Society. In 1993 Chinese women athletes took six out of nine possible medals at the World Championships at Stuttgart. Their coach attributed their success to intensive high altitude training and cordyceps supplements-although others suspected illicit drug use. (From The Independent, 19 April 2004)

Elite British Schools in China

In anticipation of the lifting of a ban which prohibits Chinese and foreign children studying together, British public schools are being set up in China. Leading the way is Dulwich College International School in Shanghai. This will be the first of four schools, which Dulwich College plan to set up in China. The Shanghai school is considered a pilot venture, which will cater for the children of British expatriates and Chinese people with foreign, Hong Kong or Taiwanese passports. Foreign run schools are expected to be a fast growing market as soon as the Chinese government allows other interested groups build new schools.

The communists prohibited foreign missionary schools after coming to power in 1949 and banned Chinese students from studying together with Westerners ever since, but educationalist believe that this could change.

Recruitment to the Dulwich College is promising and there seems to be a very good awareness of British education according to Graham Able, the Master of the College.

Dulwich has plans for a second college at Suzhou in joint venture with a Chinese 800 year old school. Two further schools are planned for Beijing and Shenzhen. Universities are also looking to expand their activities in China. Nottingham University is expected to be the first British University to open a campus in China. (From, The Times 4 May 2004)

China & India, 'Dancing Elephants'

China and India are taking noteworthy steps to work together and companies from both sides are benefiting by exploiting each others' markets and special skills. The Indian prime minister Atal Behari Vajpayee visited Beijing last June and a number of measures were set in motion. India recognises China's rule in Tibet and China dropped its recognition of Sikkim as an independent state. Trade between the two countries, although small is now growing at a fast rate-50% a year since 1999-and is expected to exceed $10 billion in 2004/5. India has advanced software development skills which complements China's hardware. Indian software centres have been set up in China by Infosys and Tata and China's Huawei has invested $60 million in a 700 strong research and development centre in Bangalore.

The two countries are also believed to be looking for closer regional cooperation, India is believed to want to join the Shanghai Security Cooperation Organization, whilst China is thought to want observer status at the South Asian Association for Regional Cooperation. Military deployments along the common border are claimed to have been reduced. New Delhi hope that the Chinese contact will help in resolving the dispute with Pakistan over Kashmir, because of China's political closeness to Pakistan. (From, The Far Eastern Economic Review 28 April 2004)

Multinationals are starting to fight over Chinese assets

On 5 May, SAB Miller, the world's second largest brewer launched an unsolicited HK$ 4.3 billion bid for control of Harbin Brewery, China's fourth largest. It was forced into this by its bigger American rival Anheuser Busch which agreed to buy a 29% stake in Hong Kong listed Harbin.

China's central government and local municipalities are privatising state-owned enterprises in growing numbers. More than $1 billion is flowing into China as foreign direct investment each week, so such fights are likely to become more common and bid battles are a recipe for overpayment. It will happen more in some sectors of the economy than others. In sectors where distribution, local brands and local expertise are important i.e. consumer goods and eventually financial services, increasingly bitter fight are expected. Foreign companies supplying technology are trying to change joint ventures to wholly owned businesses. However the state is likely to keep control of strategic sectors such as oil, power and telecommunications. (From The Economist 8 May 2004).

Chinese Ambassador visits Liverpool

His Excellency, Mr Peixin Zha and Minister-Counsellor Madam Xiaokang Zhang visited Liverpool on 23/24 February 2004 at the invitation of the ChinaLink and Liverpool City Council. Mr Zha was also invited to attend the 'topping out' ceremony for the Chinese optical telescope in Telescope Technology Ltd. Dr Kegang Wu, Director of ChinaLink briefed the ambassador on Liverpool's links with China, including the twin sister city arrangement with Shanghai. The party visited the Chinese Arch in Chinatown, the Museum of Liverpool Life, the Maritime Museum, Speke Garston Estuary Industrial Park etc. (From Silk Road News, Issue 178, April 2004)

International Women's Day celebrated in Liverpool

Celebrations took place at both the Wah Sing Community Centre (on 29 February) and the See Yep Association (Four counties Association, Guangdong) on 7 March. The guests on both occasions included the Consul General of PR China in Manchester, Wen Fulin. There was Chinese entertainment at both events. (From Silk Road News, Issue 178, April 2004)

Writing in Taiwan taking a new direction

The traditional Chinese practise of writing from top to bottom and from right to left is to end in Taiwan. From next year all government documents must be written horizontally and from left to right as in the west. Taiwan is the last Chinese speaking government to undergo the change. There will be some opposition from those who say that Taiwan is abandoning its heritage and who feel that with the mainland destroying so much from the past during the Cultural Revolution and with its dash for westernisation, Taiwan is the last bastion of Chinese tradition. However a government spokesman said that the old style is confusing. The Chinese mainland changed from the top to bottom style in the 1950s when Chairman Mao also introduced simplified characters as an aid to literacy. (From The Telegraph 7 May 2004)

Writing Thread of History along the Silk Road

Many treasures are on display for the first time at the British Library until 12 September 2004. Many exhibits come from the vast collections of the 19th Century British scholar, archaeologist and explorer, Sir Aurel Stein, who was fascinated by the Silk Road ever since he was a schoolboy. However he is described on one official Chinese website as 'a heinous thief', who obtained his treasures mainly by theft and through unfair transactions with the corrupt and impotent governments after the Qing Dynasty. Nevertheless, Chinese scholars have worked with the curator, Susan Whitfield on the exhibition. Chinese artists archaeologists came to the British Library to construct an exact replica of one of the frescoed caves at Dunhuang. (From The Guardian 7 May 2004)

From the Chinese Press

GDP target lowered to 7% as focus shifts to sustainable development

Development should be a multifaceted concept rather than blind pursuit of GDP growth. This is the view of Hu Angang, Director of the Centre for China Studies at Tsinghua University. Promoting employment and increasing farmers' incomes will be regarded as priorities in development plans. In addition new standards will be adopted to evaluate the performance of government officials who will no longer concentrate on GDP. From 1985 to 2000 the average GDP growth of China was 8.7%, but taking into account natural and human factors (loss cost and ecological deficit), the 'real national wealth' average GDP was only 6.5%. Professor Ma Zong of Renmin University said that GDP is the most important indicator for economic trend. China's continuous growth has greatly improved the material life of its people and enhanced the country's international competitiveness. However GDP is based only on the end product and services. It excludes resource and environmental cost. The blind pursuit of GDP growth has resulted in a grim situation in the country's resources and environment. Such a method of development can hardly be sustainable in the long run. (From Beijing Review, 1 April 2004).

Government aid for those displaced by Three Gorges Dam

Displaced families are to receive 3 billion yuan ($362 million) over ten years. The money will be used to improve facilities in the new residential areas, develop local agriculture, finance technical training as well as providing allowances to needy families. More than 840,000 people will have been relocated before the project is completed in 2009. Amongst those who have already moved, half said their life had improved, 30% made a good living, whilst 20% face difficulties in adapting to their new surroundings. The displaced people mainly live in 20 counties in Chongqing Municipality and Hubei Province and they will be moved to neighbouring areas. However some will go to other provinces such as Hunan and Guangdong as well as Shanghai.

A group of 25,300 people are to be moved out before the end of August to new homes and farmland. Those responsible for poor quality of the new settlements or grafting money set aside for the construction of the settlements will be punished according to law. (From Shanghai Daily, 10/11 April 2004)

US/Chinese police co-operation

The former president of the Kaiping Branch (Guangdong) of the Bank of China, Yu Zhendong who fled to the USA to avoid corruption charges was handed over to Chinese police by US police at Beijing airport on Friday 16 April. Mr Yu allegedly embezzled a large amount of public money between 1993 and 2001. (From China Daily, 17/18 April 2004)

Chinese Olympic Committee quality award

The Chinese Olympic Committee's Anti-doping commission has been granted the ISO 9001:2000 Certificate-a world wide standard for management of quality services. This award marks a major breakthrough in China's efforts to prevent the use of drugs. This makes China one of the few countries of the world holding this certificate. (From China Daily 17/18, April 2004)

Family planning shift

Shanghai is set to implement a new policy on 15 April 2004 which will allow a married couple, who themselves are products of the single child restriction, to have a second child. The Shanghai People's Congress approved this new regulation late last year. (From Shanghai Star, April 15-21 2004)

Office occupancy costs

Shanghai office rent increased at a faster rate than anywhere in Asia last year to $348 (US dollars) per square metre per year. This made it the fifth highest in Asia (behind Tokyo, Seoul, Hong Kong and Mumbai)-but only still only 29th in the world. Hong Kong's rate was $473 per sq m per year. Taipei and Singapore's rates were both about $344 per sq m per year. Singapore's position in the list actually fell last year from 19th to 31st in the world. Shanghai's rates are expected to continue to increase at least for the next two years as demand continues to outpace supply (despite all the new building!). The world highest was London (Mayfair) at $1,659 per sq m per year. (From Shanghai Daily 3-4 April 2004)

Rags to Riches-Farm boy to Billionaire

Lu Guanqiu, a 59 year old Chinese entrepreneur from Zhejiang Province has been listed as the fourth richest man in China by the Rich List 2003 complied by Rupert Hoogewerf. The Wall Street Journal, has hailed him as 'the hero of the nation'. He has a personal wealth of 5.4 billion yuan ($652 million). Lu left school early because of poverty and started a flour- milling factory, which was not a success. At that time private business was in fact deemed illegal. However he became well known because of this and was invited to run an agricultural machinery repair shop in 1969, when he was only 21 years old. This business grew and concentrated on making automobile parts. In 1988, Lu bought the enterprise, which continued to grow and become the Wanxiang Group Corporation. This business continued to develop and grow and now has 18 affiliated companies in seven counties, which include the USA and the UK. Mr Lu hopes to add a further '0' to his fortune in the next decade-making himself a US $ billionaire.

Zhejiang is outstanding for the development of private businesses-out of a total GDP last year of 920 billion yuan ($110 billion), 70.1% was in private hands. (From Beijing Review 1 April 2004)

Mr Wen's first visit to Europe

The Chinese prime minister's 11 day tour will take him to Germany, Britain, Italy, Belgium and Ireland. Speaking ahead of his tour, Mr Wen Jiabao, indicated that his government would take forceful but prudent measures to keep the economy on a steady course. He said that there are problems and contradictions in China's economic performance. There is a tendency for strong inflation above all with the growth in prices of raw materials and the Chinese government must adopt severe and efficient steps to resolve them. Last week world markets took a tumble after the Chinese central government took steps to cool the economy, including raising the capital requirements for investment in certain sectors and tightening control over the land market.

Boosting trade with Europe is a priority and it is understood that Beijing will sign a number of agreements with the EU on customs matters and space-cooperation. Germany is China's main trade partner in Europe and China is Germany's biggest trade partner in Asia with bilateral trade worth $41.8 billion last year, according to mainland statistics. It is possible that Germany may sell a plutonium plant to China, but this has been opposed by green groups and Germany's opposition. In an interview with People's Daily, Chris Patten (the EU Commissioner for External Relations), said that the EU and China would sign a series of agreements on technological and nuclear cooperation. (From South China Morning Post 3 May 2004)

Chinese UN peacekeepers

Chinese police officers are being trained to play a role in UN peacekeeping around the world. The special police school is preparing to move into a 150 million yuan, purpose built campus, which can accommodate 250 trainees. Chinese were first involved in UN duty in Cambodia from 1992 to 1994 when 800 military engineers were on duty. Chinese police went on their fist mission abroad in East Timor in 2001 and since than officers have been to Bosnia, Liberia, Kosovo and Afghanistan. The peacekeeping initiatives are a departure from China's reluctance to become involved with foreign conflicts and its passive foreign policy.

The foreign media were allowed into the school for the first time last week. It is hoped that peacekeepers from other Asian nations may be trained here in the future. Applicants must be at least 25 years of age, with five years police experience. The three-month course includes police techniques, land-mine detection, driving, the English language, human rights and media issues. Guest lecturers have been brought in from Norway, Ireland and other countries to create an international environment. (From South China Morning Post 3 May 2004)


Sino File is compiled by Walter Fung with some input for From the Chinese Press by Teresa Ray.

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